Foreign Firms Chase African Deals With New Facilities

Apr. 17, 2014 - 10:10AM
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Factory Fresh: A new factory in Mozambique operated by DynCorp International and its partner OTT Technologies Mozambique has rolled out its first Puma M36 4x4 armored personnel carriers. (OTT Technologies)

BULAWAYO, ZIMBABWE — In just the past three months, five global defense companies have announced plans to open factories, maintenance facilities and marketing offices in four southern and east African countries.

The companies provide goods and services in the fields of armored vehicles, military aircraft, aerospace defense systems and naval shipbuilding. Two have already started operations in their new African bases.

It’s a sign of the continent’s warming defense market, in which various governments are expected to sign deals worth an estimated $20 billion over the next decade. Defense industry analysts say planned purchases include new and upgraded armored vehicles, naval patrol craft, military aircraft, air defense systems, UAVs, improvised explosive device (IED) jammers and radars.

Broadly speaking, the growing demand for defense products in southern Africa is powered by the desire to modernize forces, while countries in east and west Africa are building up to confront evolving trans-national security threats, said an African defense market analyst attached to the Zimbabwe Staff College of the Zimbabwe National Army.

“This demand will be sustained in the short term as countries on the Atlantic coast of West Africa equip themselves to confront piracy in the Gulf of Guinea,” the analyst said.

Despite these trends, and despite generally steady economic growth, he said global defense manufacturers should not expect demand from the African market to outgrow expectations.

“Most African economies are forever hamstrung by financial problems. Therefore, they are not yet healthy enough to sustain huge defense expenditures,” he said.

Kenya

In this latest scramble for Africa, Kenya has emerged as a top beneficiary.

In January, Italian shipbuilder Fincantieri said it will soon establish its first African shipyard to supply new naval vessels and provide maintenance-repair-overhaul (MRO) services to African and Middle Eastern customers. Fincantieri intends the new Mombasa yard to serve the growing demand for naval vessels and defense systems for governments facing piracy and terrorism in north and east Africa and the Horn of Africa.

The company wants to build on the momentum created by its recent launch of the Algerian Navy’s new multi-purpose landing helicopter dock ship. Part of the Bâtiment de Débarquement et de Soutien Logistique type, the Kalaat Beni-Abbes started final sea tests on Jan. 14 in La Spezia, Italy. It will undergo platform and combat system customer acceptance trials before handover to the Algerian Navy in September.

In February, Eurocopter Southern Africa Limited (ESAL) announced plans to set up a permanent base at Nairobi’s Wilson Airport to support the company’s airborne law-enforcement and civic emergency response gear.

ESAL Chief Executive Officer Arnaud Montalvo said the new base will help sell to the country’s booming civil aviation sector and meet steady demand from the Kenya Defense Force, the Kenya Police Services, and the Kenya Wildlife Service.

Montalvo said the company, whose sole base on the continent is in South Africa, had in the past seven or eight years expanded sales to other countries.

Eurocopter Southern Africa Limited has sold helicopters to the Lesotho Defense Forces, the Botswana Defense Force and the Namibia Police Services. Most sales outside South Africa have been to law-enforcement agencies.

“But in Kenya, [our market] is not only law enforcement, it is also other government agencies: Kenya Wildlife, Kenya Forestry, Kenya Pipeline, plus many civilian operators who are mostly in the utility sector,” Montalvo said. “The Kenya Police have growing needs and have issued a tender for a twin-engined helicopter. We are confident there will be more tenders in future.”

The new base at Wilson, one of Africa’s busiest airports, will help ESAL chase new business with newer helicopters and MRO jobs on older models.

“We have introduced two new platforms: the EC145, with one delivered to the Namibian Police [Services], and the EC135 to the Lesotho Defense Force. We expect to sell more helicopters to the Lesotho [Defense Force] in the medium term. They have aging aircraft to replace. They are still using an EC135 to replace BO 105,” he said.

Montalvo said the company also hopes to build on sales to the Angolan offshore oil and gas markets by aggressively marketing its larger helicopters to firms serving the emerging oil and gas facilities off Mozambique and Kenya.

Botswana

In late March, Saab opened a marketing office in Botswana’s capital of Gaborone. The Swedish company, which already had offices in Kenya and South Africa and some sales in Angola, Botswana, Ghana and Namibia, is looking to boost its business in the Sub-Saharan region.

“Saab, with its focus on military defense and civil security, has always made it clear that one of its main goals is to grow and break into the Sub-Saharan region. With the growing economies in Africa, this expansion has now been made all the more important,” said Saab Botswana office manager Jerker Ahlqvist.

Ahlqvist said Saab picked Botswana for its transparent business environment and high potential for business opportunities for various products. Saab officials say Botswana has expressed serious intent to acquire Saab’s flagship Gripen E fighter jet.

Saab, which seeks 10 percent of the global military aircraft market within the next 20 years, hopes that Sub-Saharan African countries will buy up to 450 Gripens of the C, D and E models.

The company touts the plane’s relatively low cost of development, acquisition, operation and maintenance.

Sudan

Sudan may soon get a new foreign facility as well. Last week, Ukrainian aircraft manufacturer Antonov was reported to have renewed interest in establishing a maintenance, repair and overhaul base at Safat Aviation Complex in Khartoum.

As quoted by the Paris-based Sudan Tribune, Sudanese President Omar al Bashir said the base would allow Antonov to pursue contracts from all across Africa. Potential customers include most African and Middle Eastern air forces which have a large number of Antonov aircraft that break down due to lack of service.

But Bashir also said no deal would be signed unless Antonov agreed to service Sudan’s large fleets of civil and military Antonov-built aircraft inside the country. The Sudanese Air Force, which operates at least 18 Antonov jets, including An-12s, An-26s and An-30/32s, ordered five more last year.

Mozambique

In early March, DynCorp International rolled out the first 16 armored personnel carriers from its new Mozambiquan factory. The US company, which has a partnership with local automotive manufacturer OTT Technologies Mozambique, received an order for 115 armored personnel carriers from the US State Department under its African Peacekeeping Program. The Puma M36 4x4 vehicles will go to seven West African armies participating in the United Nations Multidimensional Integrated Stabilization Mission in Mali, said DynCorp spokeswoman Ashley Burke.

Nigeria

Nigeria will continue to be among the most lucrative African defense markets, with demand is expected to grow 12.6 percent over the next four years, according to a report by market analyst firm Strategic Defence Intelligence, “Future of the MINT (Mexico, Indonesia, Nigeria and Turkey) Defense Industry - Market Attractiveness, Landscape and Forecast 2015-2019.”

Nigeria is battling radical Islamic group Boko Haram and maritime crimes in the Gulf of Guinea.